Now, clearly it cannot be 'right' to pay public servants through personal service companies whilst HMRC cracks down on the practice in private businesses under the IR35 rules. (Which IMHO just highlight the stupidities of the massively over-complex UK tax code).
But to say that this will raise more money for the government is patently untrue. All these people are employed by the taxpayer, so any tax they 'pay' is just a discount to Real Taxpayers. It is just money going round in circles. True, that if these people have less tax taken off their pay, then this 'extra' money in their pockets - or some of it - 'escapes' from the government. But since it will no doubt be used to buy goods and services - which are themselves taxed - a lot will still 'go back' to the government.
FWIW I know for a fact the Financial Ombudsman Service employs people through Personal Service Companies. I have fairly concrete suspicions that the Financial Catastrophe Authority does as well. So the FSCS will also probably be at it. These are not outside consultants (like another friend of mine is for the ad hoc work he does for the Bank of England) but people sitting in their offices doing 9 to 5 work, well activity, for them.
Thursday, 5 March 2015